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Wednesday, 14 August 2013

As In Previous Quarters, This Is A Very Important Week In The Gold Market

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GLD, DGP, UGLD, NUGT, GTU, IAU over the next 72 hours. (More...)

This week three quarter ago I alerted the gold market to
what then was a cyclically important week in gold. The two weeks of
trading that followed proved to be of great interest to participants
worldwide. The price of gold fell significantly, trading down from
around $160 on the GLD ETF to a low just below $151, a fall of over 5.5%.
Then
on February 27th, When gold was bouncing off a seeming near-term bottom
and many analyst where again filled with risk-on enthusiasm for the
precious metal, I suggested that regardless of price level, a more
prudent time to enter gold was closer to the end of June. See "Gold Chart: Price May Be Right, But Is Timing?"
On May 20th I also put out a third article on gold titled, "Gold Charts: Warning In February Still Valid Today"
in which I warned that this year's seasonal down-pressure was still
likely not over. The wisdom of February's article had become fully
apparent by then, with gold prices down another 20%, and the GLD near
$131.
In my May article I reiterated the importance of patiently
waiting for the end of June to find a positive risk-reward re-entry
time-point for gold. Another final leg down was forecast. As it ended
up, it would have been hard for me to have been more correct, with gold
falling further in June to a closing low on the GLD the week of June
27TH below $116.
This first half of 2013 did in fact prove to be
an historic sell-off in gold prices. My model then indicated a strong
buy signal on June 27TH, the week it was forecasted due in, which I had
also published at my website, GOLDPIVOTS.com.
FUNDAMENTALS SUPPORTING GOLD THIS WEEK
This
week the GLD has risen from its June's lows to a high just above
$129.50, and as in previous quarters, now may be time to look at gold's
favorable fundamentals.
1. The timeliness of annual seasonality coming in for gold prices. August is often a key month for gold.
2. Unemployment remains a chronic and unresolved problem, with an uncertain outlook, which is often a positive for gold prices.
3.
Federal Reserve tapering issues still remain on-again off-again blurry,
and a continuing dovish Fed monetary posture regardless remains likely,
also positive for gold.
4. Chinese gold buying remains strong
(even though some headlines may suggest otherwise) with China likely
becoming the largest gold purchaser in the world on an annual basis this
year.
5. Gold Mining stocks have also begun to rebound, which
may be an indicator of better production cost to expected metals price
ratios (which also makes miners particularly interesting as an alternate
gold investment). The NUGT ETF this month is outperforming.
6.
And gold is still considered a viable hedge by some analyst against a
correction in stock prices (which some analysts are anticipating
sometime this fall, if not sooner).
A LOOK AT THE CHARTS
The
following chart updates my chart from February of the GLD ETF
illustrating how waiting until about the beginning of July has been a
very good annual risk-on risk-management strategy for gold since July
2009.
(Right click on the image of the chart to open in new tab.
Left click on the image opened in the new tab to further zoom EchoVector
Analysis chart image illustrations and highlights.)(Click to enlarge)
Now,
this week is particularly important for the gold metals going forward
into August's primary option expiration, and also going forward into the
three week's thereafter, from an EchoVector Analysis Perspective.
Last year, the three weeks that followed options expiration proved
particularly strong on relative price strength basis within an annual
echovector perspective.
Zooming into this perspective on the
chart below, we see (highlighted in red) the currently active annual
echovector running to this week's current high on Monday from its
coordinate echo-back-week high on the corresponding Monday one year ago.
We also see this year's coordinate green extension vector (symmetrical
to the prior four years) leaves prices additional room to rise from
current levels -- a rise to the $135 price level on the GLD, before
reaching parity. If prices hold up this week going into expiration, this
may indicate gold might be staging for a nice price lift in the
following weeks that could last well into mid-September.
(Right
click on the image of the chart to open in new tab. Left click on the
image opened in the new tab to further zoom EchoVector Analysis chart
image illustrations and highlights.)(Click to enlarge)
ADDITIONAL ANALYSIS
If
gold does not hold up the next few day's going into expiration, or
shows little or no following lift next week, we could see the annual
echovector start to pivot downward again with gold potentially
revisiting its summer lows in the near term. Keeping a close eye on this
time-period, as well as the impacts of the quarterly echovector, the
bi-quarterly echovector, the tri-quarterly echovector this week and next
could help signal early gold's price bias and movement on into fall. In
the chart below each of these key echovectors is highlighted. Notice
the relatively strong downward momentums each of these three shorter
term echovectors presents. The quarterly echovector is highlighted in
solid white, the bi-quarterly echovector is highlighted in solid yellow
and the tri-quarterly echovector is highlighted in solid blue-purple.
Each of their currently corresponding near-term August option's
expiration low coordinate forecast echovectors are highlighted in the
respective spaced-color equivalent.
(Right click on the image of
the chart to open in new tab. Left click on the image opened in the new
tab to further zoom EchoVector Analysis chart image illustrations and
highlights.)(Click to enlarge)
If
gold's price stays above the red-spaced annual coordinate forecast
echovector going into options expiration and for the several days
thereafter, each of these shorter-term echovectors will begin to pivot
upward. This could add additional bullishness to gold prices going into
the following weeks, and strengthen potential price level gains from any
annual seasonality that may be in effect. Traders and investors will
want to focus on these dynamic echovector perspectives in the few days
ahead. This potential added bullish scenario would be a very positive
technical outcome for gold prices in the near-term.
It currently
appears that the risk-reward ratio to any risk-on position may begin to
increase dramatically the week of primary options expiration in
September on an annual echovector perspective basis. However the
longer-term 4-year presidential cycle echovector, coupled with this
potentially positive short-term scenario, could propel prices higher
beyond September. This is illustrated in the following chart.
(Right
click on the image of the chart to open in new tab. Left click on the
image opened in the new tab to further zoom EchoVector Analysis chart
image illustrations and highlights.)(Click to enlarge)
Will
the price of gold start to shine again soon, and gold break out above
the $130 level, setting this potential bullish scenario in motion?
Fundamental arguments have been presented by many analyst for this
possibility the last several weeks, and crucial technical support for
this possibility may also be forming this week as presented in this
extended analysis. How to measure and interpret the next several days of
trading price action has also been discussed. And the possible
ramifications to gold's outlook this fall, and into the remainder of the
year have been discussed. This is an important week in gold. So now may
be a very good time to re-assess gold's near-term attractiveness and
its eventual longer term potential standing within your portfolio.
Thanks for reading.

Friday, 9 August 2013

Today's EchoVector Pivot Point Chart And Analysis Update: Silver

This year's dramatic gold and silver price declines are big news. However, since July price lows, some gold and silver analyst are suggesting a price bounce may now be underway, particularly in silver, which at a fundamental level may possess certain additional positives.

Silver is used more broadly than gold for industrial purposes. Silver demand overseas, particularly in Southwest Asia, has recently been reported to be reaching record levels. Silver coin demand in North America is stronger than ever on certain measures. HSBC, a significant bullion bank, sees silver prices remaining in a new and lower trading range this year, but still sees a potential upside target for the precious metal over that is 3 points higher than its current price occurring sometime before year's end. Recent options activity in silver also appears more bullish. Some indications of possible supply growth reductions in silver in the near-term currently exist. And forces inducing the central bank's generally loose monetary policy in the United States, high unemployment level in particular, appear unresolved.

In late August I presented "Today's EchoVector Pivot Point Chart And Analysis: Silver" which also looked at silver's annual price chart from an EchoVector Price Analysis Perspective highlighting occurrences of silver's annual price pattern symmetries' and the possible near-term trading implications of them. Significant symmetries were presented. I focused on the SLV ETF chart as my proxy for silver metals market price action. Today I would like to also provide a very interesting update to that SLV price chart I presented as well.

(Right click on image of chart to open image in new tab. Left click on the image opened in the new tab to further zoom EchoVector Analysis chart image illustrations and highlights.)

Looking at today's chart update, we can see once again very clearly the significant symmetry that emerged in the key active annual echovector (highlighted in solid red) running to this year's current price low on Thursday June 27 from its corresponding echo-back-date low one year earlier on Thursday June 28, 2012.

Thursday this week we had a gap open in the SLV, with good price extension through lunch time, and a close near the high of its daily trading range.

And very interestingly, we can now also see that the annual echovector to Thursday August 8 from its corresponding annual echo-back-date of Thursday August 9 2012 is a parallel, and that this same echovector momentum and powerful price symmetry coordination is still very much in effect.

This year's green highlighted time-price box which corresponds to last year's coordinate green time-price box (which continued last year until silver's price 'broke out' last August 20), and these boxes symmetry, also remain very much intact, and continue in remarkable coordination.

We can very interestingly see that this year's ascending green echo-price support vector located within this year's green box also served as the gap opening price support level in Thursday's relatively strong price action.

As I mentioned in July's article, analyst may find last year's price action and this year's effective symmetries very suggestive from an echovector pivot point perspective, and for forming their silver price outlook. And the next several week's could prove particularly interesting in this formulation. If a reasonable price echo and its extension in this period of August or September doesn't occur, additional short selling pressure to new price lows could form on a technical basis.

Silver's strong price up-draft last year occurred once prices broke out of the trade box in August after last August's significant 3RD Saturday options expiration date. This strong updraft and positive price extension lasted well into mid-September. These past price movements and patterns may become particularly significant to trader's as we move into this year's corresponding week's, given this year's current active price symmetries and coordinated price momentum currently active at these key time-points and their echovectors.

Thanks for reading. And good luck in your silver investing and trading!

Disclosure: I am long SLV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am long SLV. I have a current swing trading position in SLV initially opened Friday August 31 2013. I may be looking to possibly add to my position as this week and month progress.

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